BlackRock Lauches Niche Junk Bond ETFs

By Chris Dieterich

BlackRock (BLK), the world’s largest asset manager and ETF provider, moved on Thursday to muscle into the market for niche junk bond exchange-traded funds.

BlackRock launched the iShares Fallen Angels USD Bond ETF (FALN), a fund that targets what are known as crossover credits, or fallen angels — bonds that have moved from investment-grade to non-investment grade, or junk.

Thursday’s debut would seem to take dead aim at the $193 million VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL), a fund that has surged in popularly over the course of 2016. The ETF has taken in $125 million in assets in 2016, or 65% of its current asset total. ANGL has returned 14.3% year-to-date, compared with 5.6% for the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), according to Morningstar. BlackRock’s new fund will undercut VanEck on fees, carrying an expense ratio of 0.35% versus 0.4% for VanEck.

Separately, BlackRock launched the the iShares iBoxx $ High Yield ex Oil & Gas Corporate Bond ETF (HYXE), a fund that would have been just what the doctor ordered back in the summer of 2014. It removes the roughly 10% exposure to oil and gas companies in the iShares iBoxx $ High Yield Corporate Bond ETF.

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